The Economist: Fabulous at forty

By Ray Perryman
April 20, 2013 at midnightUpdated April 19, 2013 at 11:20 p.m.

The ability to communicate has always been a defining part of our economic and social progress. At the turn of the millennium, Johann Gutenberg was selected as the most important person of the past 1,000 years because of the revolutionary effect of his printing press.

Over time, each new advance has brought a more cohesive economic system with greater productivity and possibilities for innovation.

One of the most sweeping technological advances of the past several decades is the development of wireless communication. Cellphones and other devices have profoundly altered the way we live our lives and conduct our businesses.

Forty years ago this month, Motorola engineer and executive Martin Cooper made the first mobile telephone call from handheld equipment (which, by the way, weighed 2.5 pounds, was 9 inches long and offered 30 minutes of talk time).

In 1983, the first commercial cellular system began operating in Chicago, followed a few years later by one in the Baltimore/Washington, D.C., area (according to a timeline maintained by CTIA, a wireless communications industry trade association).

Also in 1983, Motorola introduced "brick" phones, the first mobile radiotelephone. By 1985, there were a whopping 340,213 cellphone subscribers (I was one of them), though the numbers grew rapidly to reach 5 million by the end of the decade.

The 1990s saw major changes, with the FCC setting up a national framework for wireless, the first commercial text message being sent and the first smartphone being introduced (by IBM).

Subscribers doubled from 1990 to 1992 to reach 10 million, then jumped sharply by 1995 to reach nearly 34 million (13 percent of the U.S. population). In 1995, the average customer used the phone for 115 minutes per month and paid $51.

Games were added to Nokia's hugely successful line of phones in the early 2000s. Texting took center stage with a T-Mobile handset in 2003. Flip phones (the Razr) put Motorola back in the game in 2004.

The introduction of the iPhone in 2007 totally redirected and recharged the industry. Android (introduced in 2008) provided competition for the iPhone and now holds a sizable market share.

Now, there are more wireless subscriber connections in the United States than there are people, so there's a wireless device for every man, woman and child and then some. These phones are used to send more than 184 billion text messages per month (up from fewer than 29 billion messages per month just five years ago).

Add to that apps, music, movies and TV, games, social media, maps and on and on and on. With ongoing improvement to the infrastructure and 4G (and more) becoming more widely available, look for the potential uses for devices to continue to grow.

These connections are certainly not just for entertainment or socializing; they also have had a profound effect on business operations. The ability to communicate wirelessly improves productivity in virtually every industry and involves substantial other benefits.

Emissions can be reduced by increasing transportation efficiency, for example. Health and safety advantages accrue on multiple levels; almost 400,000 wireless 911 calls are made every day, and wireless monitors and sensors are being used to keep an eye on medical conditions (with more applications on the horizon). The ability to keep in contact has allowed people to leverage their time in countless ways, conducting business on the road and at odd times with relative ease.

The industry itself is a huge economic generator, employing millions of people. Moreover, new advances can open up segments to exponential growth, such as with apps (which went from essentially nonexistent to a $10-billion industry in just four years). Wireless providers are investing billions, and developers across the nation are working on the next big things.

A variety of types of technology firms are jockeying to determine the future paths of the industry: software giants such as Microsoft, hardware behemoths such as Apple, social media pathbreakers such as Facebook, Internet shapers such as Google and many others.

Forty years ago, cellphones didn't exist. Thirty years ago, they were expensive, cumbersome and very limited in scope. Twenty years ago, they started to become smarter and more fun. Ten years ago, they got cameras, and about five years ago, touch screens.

Now, handsets are morphing into glasses and watches and who knows what next. Can you imagine what is going on in labs and cubicles and conference rooms across the nation right now?

We can scarcely envision the advances in wireless communication over the next five years, much less 40. One thing that's certain, however, is that productivity and the economy stand to be among the primary beneficiaries.

Dr. M. Ray Perryman is president and chief executive officer of The Perryman Group (perrymangroup.com). He also serves as institute distinguished professor of economic theory and method at the International Institute for Advanced Studies.